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Kurdistan’s Biggest Source Of Oil Funds

Russia, the only global power that has not called for canceling of next week’s Kurdish referendum on independence, is the largest contributor of funds for oil and gas deals in Kurdistan, committing some US$4 billion in deals to the semi-autonomous region of Iraq this year, Reuters reports, quoting industry sources.    

The Kurdistan Regional Government (KRG) is facing stiff international opposition to the referendum, with Western European powers, the U.S., and UN all arguing that a referendum would distract the Iraqis and the Kurds from the fight against IS, which has not yet been completely dislodged from the region.

“The United States does not support the Kurdistan Regional Government’s intention to hold a referendum later this month. The United States has repeatedly emphasized to the leaders of the Kurdistan Regional Government that the referendum is distracting from efforts to defeat ISIS and stabilize the liberated areas. Holding the referendum in disputed areas is particularly provocative and destabilizing,” the White House said on September 15.

Russia, for its part, has been silent on the vote, and has not called for calling off the Kurdish independence vote.

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In July, Russia’s Foreign Minister Sergey Lavrov said in an interview with Kurdish television channel: “We proceed from the assumption that the legitimate aspirations of the Kurds - just as those of other people - have to be pursued in accordance with international law.”

Russia’s Foreign Ministry told Reuters that it had nothing to add to Lavrov’s comments on the issue from July.

“Moscow has been effectively filling the gap as the United States has been pulling back from Iraq,” a senior source in Erbil told Reuters.

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Meanwhile, since February this year, Russia’s oil giant Rosneft has signed three major oil and gas deals with Kurdistan, and although the Russian company has not disclosed the sum of any of those, industry sources tell Reuters that the combined value so far is around US$4 billion.

Related: Have Oil Markets Reached A Turning Point?

In February, Rosneft and Kurdistan signed a pre-financed crude oil purchase and sale contract for 2017-2019. That deal was for US$1.2 billion in pre-financed crude oil exports, according to Reuters. In June, the parties expanded their cooperation with agreements in exploration and production, monetization of the export oil pipeline in Iraqi Kurdistan, and production sharing agreements. That deal raised the total commitment of Rosneft—led by Vladimir Putin’s close ally Igor Sechin—to US$2.8 billion.

The latest agreement was signed just days ahead of the referendum. On Monday, Rosneft and Kurdistan agreed to look into the opportunity for Rosneft to fund the construction project of Kurdistan Region’s natural gas pipeline infrastructure. The pipeline could export gas to Turkey and the European market, Rosneft said. That deal is worth more than US$1 billion, according to Reuters’ industry sources familiar with the agreement.

By Tsvetana Paraskova for Oilprice.com

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